501.BC Indonesia/12–2048: Telegram
The Acting Secretary of State to the Consulate General at Batavia 1
676. Usgoc 255. Following communiqué will be released for publication in US afternoon papers Tuesday Dec 21:2
“ECA Administrator announced today that effective immediately ECA is suspending the issuance of authorizations for the procurement [Page 593] of supplies destined to be used in Indonesia. Hitherto ECA has allotted funds for economic recovery of the Dutch-held portion of Indonesia as part of its program for assistance to the Netherlands. This policy was based on the conviction that expansion of production and exports of the many raw materials of Indonesia such as rubber, copra, palm oil, tin, petroleum, bauxite, etc. would provide a great stimulus to the recovery of not only the Netherlands, but also of Western Europe as a whole. Up to the present ECA has earmarked $72,700,000 for Indonesia. Of this sum, $4,100,000, represents a procurement authorization issued during the third quarter of 1948 for the purchase of copra in Indonesia on behalf of the Bizone. Against the balance of $68,000,000 ECA has issued procurement authorizations totaling $59,573,358. Of this amount well over half has been for textiles, rice and wheat flour which have not only provided an incentive to increased production but have directly benefited the Indonesian population. As previously indicated, no procurement authorizations have been issued for military supplies.
ECA funds can only be spent if there is reasonable assurance that their expenditure will actually contribute to economic recovery. In view of developments in Indonesia in recent days ECA considers that conditions favorable to the continuation of an effective economic assistance program do not now exist. The further commitment of ECA funds would therefore be unjustified.
This decision to suspend the Indonesian program has been concurred in by the Department of State.”